While the federal government mulls the most effective way to implement consumer protections with regard to financial transactions, California has gotten the ball rolling with a law that takes effect Jan. 1.
Gov. Arnold Schwarzenegger signed into law SB 95, known as the California Car Buyers Protection Act, which gives dealers 21 days to pay off any balance owed on a trade-in. It also prohibits dealers from reselling a car until the title is cleared.
Since dealers hit on hard times last year, with slumping vehicle sales and increased floorplan restrictions, lenders have seen an uptick in delinquent titles. In California, more than 500 new- and used-car dealerships closed their doors last year, according to bill sponsor Sen. Ellen Corbett (D-San Leandro). Though the law is meant to protect consumers, I think lenders will benefit, too.
